Friday, May 28, 2010

"Green business" sense?

Nike made an interesting choice when they decided to keep their 'closed loop' business policy quiet. 'Closed loop' means that they hope to one day reduce the amount of waste they produce to zero, and according to this video on CNN, they seem to think they will one day accomplish just that. It's a marketable concept, making pro-soccer uniforms out of recycled bottles and playground surfaces out of old shoes. They even use their own factor scraps to make a rubber they call 'Nike Grind,' and have their own unique recipe for what they call 'green rubber' that uses 96 percent fewer toxins and annually eliminates a significant amount of toxic waste.

'Going green' is not only a growing business trend, but, with the rebounding economy, a factor that consumers are looking for in the products that they buy. In this video, it is clear that maintaining a 'green business' isn't just a Nike policy, but the way they do things. Nike made the conscious choice to not advertise that fact. But why?

It could be said that Nike sometimes favors controversial advertising. Nike was criticized in 1993 for a commercial featuring Charles Barkley in which Barkley professed that it was not his job to be a positive role model for America's youth, but instead to "wreak havoc on the basketball court." In 1995, Nike carefully walked the line between associating the Nike brand with the spread of HIV and the strength of will of an athlete with HIV, in an ad featuring HIV positive marathon runner Ric Munos. Just this spring, the TV spot featuring Tiger Woods and the voice of his dead father was met with overwhelming disapproval by many critics and consumers alike, and Brand Week reported that it scored low compared to other ads in the apparel footwear category. Interestingly enough, the most recent ad to score that low was also a Nike ad, featuring Serena Williams last September.

If any company can afford to be risky with their advertising, a company like Nike can. Nike is a well-established brand: almost anyone can recognize the infamous swoosh and "Just do it" slogan. Nike has a strong consumer base, and in addition to their risky ads, sound product placement and contracts with teams and athletes that wear only their products. During the 2010 football season, TCU was one of ten NCAA teams chosen to wear Nike's new Nike Pro Combat uniforms, which garnered a lot of attention and press in Fort Worth.

But why so many risky ads? Why not capitalize on what is good about Nike? A bold creative spot about high performance shoes made from recycled goods would probably resonate well with consumers. But it seems that their strategy is to be memorable, and strike the viewer in a way, good or bad, that will spur a reaction. And in today's world of search engines, and at-your-fingertips media, it makes sense. The most watched commercials on YouTube are probably the ones that have generated controversy and discussion. If an ad is the subject of a blog, or a topic that is widely discussed, someone who hasn't seen the ad will likely search for it on the web. It's a good way for Nike to reach consumers both inside and outside their target audience.

And it might be working for them. Market Watch reported that Nike shares have risen 15 percent this year. This can be attributed to many things, a growing action sports market for instance, and not just advertising. The point is that they aren't hurting as a result of their controversial ads. Shares did fall some recently, though, because investors are skeptical about Nike's five year plan to increase profits by 40 percent. Will they be able to? I think so, as long as they continue operating with good business sense, expand apparel retail and strengthen their appeal to female consumers. And because women by and large seem to be more likely to respond to green marketing, now could be a good time for Nike to use its green business practices as a hook in their advertising.

Even so, Nike chose not to allude to the fact that the Nike jerseys for World Cup 2010 are made out of 100 percent recycled materials in their newest "Write the Future" spot out May 17. The ad tries to illustrate the Nike brand as a life-changing cultural phenomenon. Again begging the question: Why not advertise that Nike is green? You would think that recycling would have a more obvious impact on the future than an athlete wearing Nike sneakers.

What do you think?